Gas prices below $3 a gallon at some Michigan stations after record Thanksgiving high

Despite record Thanksgiving gas prices, some discount membership clubs in metro Detroit — such as Costo, Sam's and BJ's — were selling it Monday for less than $3 a gallon.

All three in Madison Heights are charging just $2.89.

As you might expect, that's lower that the state average of $3.64 for regular unleaded, according to AAA, the state's largest auto insurer. But at least one analyst is forecasting that the lower prices at the discount clubs is simply leading what could be the average gas price nationwide under $3 by Christmas.

Gas prices are determined by supply and demand, although there are multiple factors that go into that calculation, among them: the price of crude oil, regional refinery capacity and costs, the cost of gas distribution, competition with other gas stations, state taxes — and the cost of marketing.

"As millions of Americans hit the road for Thanksgiving, we saw gasoline prices continue dropping coast to coast last week, and a new record was set for the largest single-day decline in the national average," said Patrick De Haan, head of petroleum analysis at GasBuddy. "In addition, 47 of the nation’s 50 states have seen diesel prices falling as well, providing well-needed relief ahead of the holidays and helping to stem the rise in inflation."

Retailers are free to determine what they should charge for gasoline, and competition often will force one station across the street from another to match the other's price. But under antitrust laws, competing retailers cannot agree to raise or lower prices together.

It's not unusual for drivers to pay less at the membership clubs than at nearby stations. Still, the below-$3 prices give motorists a boost as they wrestle with inflation and head into the busy holiday travel and shopping season.

Warehouse clubs, which members pay a fee to join, can afford to charge less because of the volume of gas they sell — you've no doubt seen the long lines at those pumps — and use the lower prices to draw customers into the store to buy other things.

"All the metrics look very positive for motorists as this week is likely to continue seeing falling gasoline prices, with many areas falling to the lowest level since Russia’s invasion of Ukraine in February," said De Haan. "It’s entirely possible the national average price of gasoline could fall under $3 per gallon by Christmas, which would be a huge gift to unwrap for motorists after a dizzying year at the pump."

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GasBuddy tracks gas prices at tens of thousands of outlets nationwide.

The top 10% of stations in the country average $4.89 per gallon, while the bottom 10% average $2.75 per gallon, according to GasBuddy. The states with the lowest average prices are Texas, $2.83; Oklahoma, $2.94; and Arkansas, $2.99. The states with the highest average: Hawaii, $5.14; California, $4.97; Nevada, $4.66.Gas prices in Michigan were somewhere in between. The state average is 17 cents less than a week ago, 35 cents lessthan a month ago, and still 32 cents more than this time last year and more than the national average of  $3.56 a gallon. The average price in metro Detroit is even lower, $3.46 a gallon, 19 cents less than last week, and one of the lowest averages in the state.

The other least-expensive gas price cities were Lansing and Ann Arbor, both averaging $3.65 a gallon.

The most expensive: Jackson, $3.80 a gallon; Grand Rapids, $3.79, and Benton Harbor, $3.77.

Price swings of 30-40 cents a gallon are common. However, if a station appears to be overcharging for gas, you can report it to the Attorney General's office, which will investigate retailers for price gouging, under the Consumer Protection Act.

The Attorney General's Office said it reviews retail profit margins and the actual cost of providing gasoline products to consumers throughout the state of Michigan, although generally, corner gas station owners "have not appeared to profit from high prices."

Instead, the attorney general's office said, high profits have been extracted further up the supply chain.

Contact Frank Witsil: 313-222-5022 or fwitsil@freepress.com.

This article originally appeared on Detroit Free Press: Gas prices at some stations in Michigan fall below $3 a gallon